The biggest goal of retirement planning is to ensure your life remains comfortable after regular paychecks stop coming. Therefore, retirement income planning seeks to develop income streams to support your living standards after you lose your employment wages or salary. This income will then support you beyond basic needs to achieve other long-term goals like dream vacations, philanthropic activities, or new hobbies. So, why should you start income planning as soon as possible?
1. Ensure Smooth Transition to Income Loss
If you fail to plan for a steady income, your life will be disrupted by a sudden income loss. You may end up having to cut down on essential household expenses or decrease the quality of your lifestyle.
The biggest challenge is that you may not have enough savings and investments to support yourself after employment ends. Income planning services help you put up a nest egg to ensure a smooth transition.
2. Mitigate Inflationary Effect on Income
Inflation whittles down the purchasing power of your income, which eventually makes it harder to maintain the same standard of living. You spend more and more of your retirement income buying goods you could have bought with less money in the past.
Income planning ensures your savings and investments grow faster than inflation. This way, your income will keep its purchasing power as the cost of goods and services increases.
3. Enjoy Higher ROI
The best way to enjoy a higher return on investment (ROI) is to start investing earlier rather than later. It becomes harder to earn decent investment returns as the years to retirement dwindle. This is because your capital base is smaller, and the available options are more limited. You will also find that you have a smaller time window to enjoy your investments before you retire.
4. Mitigating Weakening Health
Retirement income planning recognizes you will not be as productive as possible in the later years to maintain your current income level. This is why it's important to take steps to prepare for the future, even if you are still young and healthy today. Early income planning ensures you can build up sizable assets while still being energetic.
5. Ensure Financial Independence From Well-Wishers
It's not uncommon for retirees to rely on their children or other relatives for financial support. This is especially true if they don't have a sufficient retirement income plan in place. It leaves you financially dependent on them. You should avoid this situation by having a sound retirement income plan in place even before you retire.
Are you worried about your income prospects in retirement? Then, book an appointment with income planning services to start discussing planning a secure future.
Share8 February 2022
After we bought a house, I started realizing that we were going to need to learn to save a little money. We had become pretty laid back about spending because we were so accustomed to making so much extra each month, but with a mortgage, we found ourselves running out of money on a regular basis. I decided to get real about our finances, which is why I set up a financial plan to stick with year round. You wouldn't believe how much of a difference that simple plan made. We went from scraping together money to head to the grocery store to sticking with a rock solid budget.
